Principal Issues: How are stipends paid to graduate students in their capacity as graduate research assistants treated for income tax purposes?
Position: Amounts paid to graduate students at universities are generally either scholarships or fellowships, although they may also be research grants or employment income. XXXXXXXXXX.
Reasons: Any amount received from an office or employment is specifically excluded from paragraph 56(1)(n) of the Income Tax Act and the scholarship exemption is not available.
May 5, 2014
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your correspondence of March 12, 2014, about stipends paid to graduate students in their capacity as graduate research assistants at universities in Canada.
You explain that the recent court decision in Rizak v MNR, 2013 TCC 273 XXXXXXXXXX.
Amounts paid to graduate students at universities are generally either scholarships or fellowships, although they may also be research grants or employment income. A student who receives a scholarship or fellowship includes the amount as income according to paragraph 56(1)(n) of the Income Tax Act. The scholarship or fellowship may be free from tax as a result of the scholarship exemption if the student is eligible to claim the education tax credit. However, any amount received from an office or employment is specifically excluded from paragraph 56(1)(n), and the scholarship exemption is not available. XXXXXXXXXX.
XXXXXXXXXX. The CRA and Employment and Social Development Canada (ESDC) jointly administer the Employment Insurance Act. However, the CRA does not develop tax or employment insurance policy.
Your concern that amounts received by graduate students who are not employees should qualify as insurable employment for employment insurance purposes is an employment insurance policy issue. The Canada Employment and Insurance Commission, an office within the ESDC, is responsible for reviewing and approving policies for the employment insurance program. I invite you to send your comments about employment insurance policy to the Deputy Minister of Employment and Social Development, 140 Promenade du Portage, Mail Stop 1301, Gatineau QC K1A 0J9.
Your concern that employment income earned by graduate students should be non-taxable for income tax purposes is a tax policy issue. The Department of Finance Canada develops tax policy. I invite you to send your comments to Finance Canada's Tax Policy Branch, 17th Floor, East Tower, L'Esplanade Laurier, 140 O'Connor Street, Ottawa ON K1A 0G5.
I trust the information I have provided is helpful.
Yours sincerely,
Kerry-Lynne D. Findlay P.C. Q.C. M.P.
Minister of National Revenue
Nancy Shea-Farrow
(905) 721-5099
2014-052461